Question: When is burial insurance not really burial insurance and pays nothing upon death? Answer: When it is a “decreasing term” policy.

Who would buy such a policy? The naïve, the vulnerable, and often, the elderly who wish to spare their family the expense of a funeral. After all, that’s what a responsible person does—prepays the cost of being placed in the ground or burned in a very hot furnace.

Pro bono legal information and advice is available to persons 55 and older through the USD Senior Legal Helpline, 1-800-747-1895; mmyers@usd.edu. Opinions are those of Professor Myers and not the University of South Dakota.

Insurance marketers know that low-income people who cannot afford life insurance will nevertheless buy a burial policy as a matter of pride, as a way to secure a dignified exit from a world in which they might not have had a conspicuous presence.

Today the cost for a basic, no-frills funeral is in the $8,000-to-$12,000 range. Accordingly, the 82-year-old widow who called the senior legal helpline assumed she was being prudent when buying a $10,000 burial policy in 1984, shortly after her husband died after a year-long struggle with cancer.

“I guess I was vulnerable at the time,” she said.

For 22 years she unfailingly submitted quarterly premium payments of $78—now with a time/investment value approximating $3,000. She bought the policy through the American Legion Auxiliary, which sold it to a “Pearl Associates” based in Illinois, which in turn sold it to Hartford Life.

Recently Hartford sent the caller a letter advising that it would accept no further premium payments; that she had in fact bought a “decreasing term” policy, and it was being terminated. It said her burial benefit under the policy was zero. “The lady I talked to at Hartford said ‘I feel so sorry for people like you who get caught up in this type of thing.’”

Term insurance has no cash value. It is essentially a wager between the insurer and the insured. The company bets you will outlive the policy. You bet you will not. But, term burial insurance? And worse yet, “decreasing” term burial insurance?

I’ve made an initial contact with the state’s division of insurance. We will be looking for a remedy. Insurance fraud is manifested in various shapes and forms. This one needs to be rearranged.